When tech founders consider selling their company, they often focus on valuation benchmarks or market timing, sometimes underestimating the importance of selecting the right M&A advisor.
The advisor you choose influences the buyers you reach, how the process is structured, and how effectively the deal captures the company’s value.
Learn which questions to ask, what red flags to watch for, and which criteria matter most, so you can approach the sale process with clarity, control, and the right partner at your side.
Assessing your readiness for sale: Preparing for due diligence
Founders should begin by assessing whether the business is ready for due diligence, ensuring it can face external scrutiny without surprises. Engaging an M&A advisor early in the process can improve this preparation and help surface potential issues on time.
Thorough preparation reduces execution risk, strengthens your position in valuation discussions and gives buyers confidence in the company's underlying operations and documentation.
Focus on:
- Financial reporting
Ensure your financial statements are accurate, GAAP-compliant (Generally Accepted Accounting Principles), and easily reconciled. You should be able to explain revenue recognition, margin trends, and forecast assumptions with confidence.
- Corporate governance
Confirm that your cap table is clean and current, equity grants are properly issued, and board approvals are in order. Diligence delays often begin here.
- Commercial agreements
Review your major customer and vendor contracts for assignment rights and change-of-control clauses. Any restrictions or ambiguities should be addressed in advance.
- Intellectual property and legal structure
Make sure IP ownership is clearly documented, including all employee and contractor contributions. Open-source software usage should be cataloged and compliant.
At this stage, many advisors will recommend a reverse due diligence exercise: an internal review that surfaces potential red flags before they reach buyers. This can include everything from cap table audits to identifying missing employment agreements or undisclosed liabilities.
Even if a transaction is not on the immediate horizon, building this level of preparedness gives you leverage. It reduces deal friction, shortens timelines, and lets you act decisively if a credible opportunity emerges.
If you're considering an eventual exit or want to understand where your business stands, L40° can help you assess your diligence readiness and define the steps needed to prepare.
Evaluating the need for M&A advisory services
Some founders consider managing a sale on their own, particularly those with strong industry relationships or prior deal exposure. While a solo approach can succeed under specific conditions, founder-led transactions often benefit from a dedicated M&A advisor, particularly in competitive or complex environments.
Advisors manage complexity, protect confidentiality, and create leverage at critical stages. Here’s how:
- Process management
Advisors drive timelines, coordinate stakeholders, and manage complexity across legal, financial, and operational workstreams. This helps maintain deal momentum and avoids costly delays. - Confidentiality
Discretion is essential when speaking with strategic buyers or private equity groups with overlapping interests. Advisors serve as a buffer, protecting sensitive information while engaging buyer interest. - Objectivity under pressure
Deals rarely unfold exactly as planned. Advisors provide a steady hand when valuations fluctuate, terms shift, or diligence becomes contentious, ensuring decisions stay grounded and strategic. - Buyer qualification and positioning
Strong advisors do more than open doors. They curate the right buyer universe, shape how the company is positioned, and manage dynamics between financial and strategic acquirers to drive competitive tension.
Read: SaaS Multiples: Valuation Benchmarks for 2025 | L40° Insights
Key criteria for selecting an M&A advisory firm
Not all advisors are created equal. Credentials matter, as do alignment, cultural fit, and proven execution.
Here's what to look for:
- Domain expertise: Look for an advisor with specific experience in your industry or business model. Vertical fluency matters, especially when explaining market dynamics to potential buyers.
For example, L40 is focused on SaaS & Tech M&A. - Track record at your scale: An advisor who excels in $20–50M deals may not perform the same at $150M. Check the results of previous transactions from the advisor or firm you want to partner with.
- Buyer network relevance: Look for an advisor connected to the right type of buyers (strategics vs. private equity) based on your company’s profile.
- Team quality: Who will actually run your deal? Some platforms sell founders on senior bankers but hand the work to juniors. Ask detailed questions about the deal team’s involvement.
Our M&A advisory team combines decades of investment banking expertise with firsthand experience in building and scaling companies. Take a look at our team. - Model alignment: Execution-driven advisors prioritize discretion and strategy. Platform-based models often emphasize volume and velocity. Know which model you’re getting.
Advisor-led vs. Platform-based M&A models
Understanding advisor fee structures
Fee models reveal how an advisor thinks and whether incentives align with your outcome. Ask how fees are credited, how the advisor defines success, and whether they’re incentivized to drive the highest-value outcome, not just a quick close.
Here's a breakdown of the potential fees:
Recommended: Sell-Side M&A: An In-Depth Guide for Tech & SaaS Founders
Setting the foundation for a successful sale
Founders who partner with M&A advisors early on gain an edge. They have more time to prepare, space to test alignment, and insight into what buyers will actually care about.
The right advisor helps define what a market-ready company looks like, flag risks before diligence, and design a strategy tailored to your business.
Discretion and precision matter for founder-led tech companies, especially in the mid-market tier.
If you’re starting to ask, “Would we be ready if a buyer came tomorrow?”, that’s when the real work begins. The earlier you start laying the groundwork, the more leverage you’ll have when the market comes calling. Talk to us today.
